COMMITTEE CALLS FOR GREATER OUTWARD INVESTMENT FROM INDIA’S INSURERS

A government-commissioned panel has recommended that India’s insurers should be granted permission to invest more heavily in overseas markets. The Planning Commission, a government body made up of economists that is in charge of formulating India’s five year plans, says that such a move will allow insurers to mitigate their risks in what is becoming an increasingly cash-rich but volatile domestic market. “We should encourage greater outward investment by provident funds and insurance companies when inflows are high,” said the report. “Such diversification will make these funds more stable and give them less exposure to the high volatility of Indian markets.” Foreign exchange reserves in India are close to topping the $300 billion mark and the central bank has come under pressure to encourage more outward flow of capital by liberalising the current restriction on overseas investments.